Wednesday, September 30, 2015

The Trump tax plan

Although most of the presidential candidates have released their tax plans, its Donald Trumps thats getting all of the attention. And no wonder. The media CNN especially are obsessed with the man. Aside from the illegal immigration issue, his positions have been short on detail. Taxes are in Trumps wheelhouse and he has some really good ideas. He also has at least one thats not.

First, lets look at whats good about the Trump tax plan. It lowers the corporate tax rate from 35 percent to 15 percent. Personally, I would take that to zero but thats probably not realistic given the level of class envy in this country. Some of you reading this right now are balking at lowering the tax on corporations because youve been conditioned by the left to want to punish them. Lets think through this logically. What happens when you tax a corporation? Let me ask it another way. What happens to your grocery bill when the price of gasoline goes up? The price of your groceries goes up. Everyone understands that concept. Why are taxes any different from gasoline? Theyre not. Theyre both expenses and they both help determine the price of products. It stands to reason that if you raise taxes you raise prices. Conversely, if you lower the corporate tax youll lower prices. The market will see to it.

Trumps reduction in the corporate tax would apply to small businesses and freelancers, as well as corporations, and the potential to stimulate the economy is enormous. Republicans have advocated either lowering or eliminating the corporate tax for decades but its always been demagogued by the left. It may take someone like Donald Trump to get this passed.

Trump lowers the top tax rate from 39.6 to 25 percent and cuts the tax brackets from seven to four. NPR quoted Howard Gleckman, senior fellow at the left-leaning Tax Policy Center as saying, Bushs was a large tax cut aimed at high-income people. This is an even bigger tax cut aimed at high-income people.Thats a rather ridiculous statement given that the plan pushes another 75 million people off the tax rolls. Yes, it lowers the top tax rate but it lowers all the rates. Any individual making less than $25,000 or couple making less than $50,000 pays no tax under the Trump plan. This is the part I have a problem with.

Before I get into it, understand that we already take care of the poor. Food stamps, housing subsidies, outright cash payments, we go above and beyond what we should be doing to compensate low-income individuals and families. Already nearly half of Americans pay no federal income tax. Trumps plan apparently pushes us over the 50 percent mark. To me, its unconscionable that a couple making $50,000 a year would pay nothing toward the well-being of this country.

Thats been part of the problem already. Too many people have no ownership stake in this country. If you dont have any money invested, why would you care how much the government spends? Everybody needs to have some skin in the game, no matter how little they make. Instead, the Trump plan continues to move us in the opposite direction.

That doesnt even take into account the 40 percent of people who get more from the Earned Income Tax Credit than they pay in. They certainly dont give a rats hat about runaway government spending.

Theres an old saying that when you rob Peter to pay Paul youll get no argument from Paul. We need more Peters and fewer Pauls.

Phil Valentine is the host of the award-winning, nationally syndicated talk radio show, 
The Phil Valentine Show.

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